Best Mid-Cap Stocks: Large-cap, blue-chip stocks are the place to go for predictable, stable returns and moderate, long-term growth. Most Dow Jones industrial average components fit that description exactly.
A few small-cap stocks generate huge returns for investors, but small-cap stocks are very risky and volatile, especially in today’s uncertain environment.
With a market capitalization of between $ 2 billion and $ 10 billion, mid-cap stocks are the perfect solution for investors who expect significant potential upside down without losing sleep at night. Here are seven of the best mid-cap stocks to buy in 2022, according to Morningstar analysts.
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7 Best Mid-Cap Stocks
Williams-Sonoma Inc. (Ticker: WSM)
Best Mid-Cap Stocks: Williams-Sonoma is an American specialty retailer of high-quality home decor. Analyst Jaime Gotts says the market is pricing from a more pessimistic point of view for the need for post-epidemic home decor.
Gates says Williams-Sonoma is better positioned to withstand the economic downturn than many of its peers because of its diverse customer base with different age and income ranges. He plans to have 5% annual repair and remodel sales growth over the next decade, and Williams-Sonoma says it will reach $ 10 billion in annual sales by 2024.
The WSM stock has a Morningstar “Buy” rating and a reasonable rating of $ 227. $ 108.15 on May 20th.
Polaris Inc. (PII)
Best Mid-Cap Stocks: Polaris manufactures off-road sports vehicles such as vehicles, snowmobiles and motorcycles. Gates says Polaris has tremendous brand value in counteracting the negative effects of inflation. However, supply chain disruptions can quickly lead to supply instability.
Katz predicts 12% organic revenue growth in 2022 and says Polaris’ competitiveness should gain market share in the company over time. In addition, international expansion and acquisition opportunities, especially in the maritime and parts / accessories segments, may increase the value of Polaris in the years to come.
The Morningstar PII stock has a “buy” rating of $ 184 and a fair value of $ 98.57 on May 20.
Gap Inc. (GPS)
Best Mid-Cap Stocks: Cape is a casual clothing and accessories retailer and owner of the Old Navy, Cape, Banana Republic, and other popular store brands.
Shares are down 37% as of May 20, making it the worst-performing mid-cap stock on the list. However, analyst David Schwartz said Cape shares are “undervalued” and the company is moving aggressively to fix the old Navy’s problems, including replacing its CEO and substantially discounting merchandise to destroy its inventory.
Meanwhile, Swartz says, there is no risk of falling into the gap financial crisis. Morningstar has a “Buy” rating and a $ 28 fair rating for the GPS stock, which closed at $ 10.93 on May 20.
Hanesbrands Inc. (HBI)
Best Mid-Cap Stocks: Hanesbrands is one of the largest manufacturers of intimate clothing and other casual wear in the world. According to Swartz, Hansprints is the clear market leader in innerwear, accounting for 60% of the company’s 2021 revenue.
While the company fights upside down from inflation and supply chain disruptions, Swartz says the company is in a relatively good position in a tough environment as it has more exposure to complementary clothing types.
He says the company’s Haynes and Bonds brands make up the pricing, and he expects Haynes to maintain about 20% of U.S. innerwear operating margins. The Morningstar HBI stock has a “buy” rating and a reasonable rating of $ 26, up from $ 11.63 on May 20.
Boston Beer Co. Inc. (SAM)
Best Mid-Cap Stocks: Boston Beer is one of the largest artisan manufacturers in the United States and is the maker of Samuel Adams, Dogfish Head, and Trolley Heart Seltzer brand drinks.
Gatts says Boston beer distributors’ inventory levels have improved significantly during the critical summer season. In the first quarter, revenue was 21% lower than it was a year ago but has increased 30% since 2020.
Katz says Boston Beer’s full-year overall margin guidance of 45% to 48% suggests significant cost forex growth throughout this year. The Morningstar SAM stock has a “buy” rating and a fair value of $ 740, up from $ 329.21 on May 20.
Nordstrom Inc. (JWN)
Best Mid-Cap Stocks: Nordstrom is a specialized clothing and accessories retailer that operates approximately 380 stores in North America. Nordstrom stocks have been relatively good in 2022 in the tough environment so far.
The share price has fallen just 6% this year, making it the best-performing mid-cap stock on the list. According to Schwartz, Nordstrom is set to make a breakthrough after years of low performance.
He says Nordstrom has a loyal customer base and an emphasis on reputable brand and service that is known for different products. The Morningstar JWN stock has a “buy” rating and a reasonable rating of $ 43.50, up from $ 21.18 on May 20.
Equitrans Midstream Corporation (ETRN)
Best Mid-Cap Stocks: Equitrans Midstream is a natural gas collection, storage, and transfer company focusing on the Appalachian Basin.
According to analyst Stephen Ellis, Equitrance’s biggest challenge is to bring its Mountain Valley pipeline into service following several legal and permissible setbacks.
The pipeline is already above its original budget and many years behind schedule, and Ellis says the management of Equitrons has almost lost credibility on its forecasts. However, he says the current energy environment will put pressure on regulators to allow the pipeline given the need for US liquefied natural gas.
Morningstar ETRN shares have a “buy” rating and a $ 14 price target of $ 7.57 on May 20.
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